If you take 10,000 developers and distribute them among 1,000 teams, the expected average ability of each team is the same as if you distributed them among 10 teams. What changes is the variance--the averages among the 10 teams will be more tightly clustered than among the 1,000 teams.
That is a different argument and may or may not be relevant. Really, read Mythical Man Month, the problem with large teams is that their size leads to internal communications overheads, politics ...
